The government backed refinance programs are very helpful to millions of Americans, but in some cases they aren’t enough. For instances, most of the government refinance programs require borrowers to have been current on their mortgage payments for the last 12 months and to show their present income is sufficient to pay all of their current debts. In cases where there have been job losses or other major disruptions in income this requirement can be hard to meet. In such cases a refinance might not be feasible in the short run. Sometimes loan modifications can work but loan modifications require the cooperation of the current lenders and that cooperation can be hard to come by. In such cases, seeking bankruptcy protection can sometimes be a good option.
In the United States families normally either declare chapter 7 or chapter 13 bankruptcy. Chapter 13 is less severe and allows borrowers to to settle with all of their creditors and pay the debts off at a manageable rate. Chapter 7 bankruptcy essentially wipes out all debts, although in most cases primary residence homes are excluded.
While bankruptcy is never a first option, it is sometimes the best option for families with income losses and mounting debts. The purpose of bankruptcy is to allow families in serious financial trouble to hit a proverbial reset button and get back on their feet financially while still retaining their home.
Contact us in the short form below if you would like to learn more about the pros and cons of bankruptcy protection from an authorized bankruptcy attorney. Consultations with a bankruptcy expert are free.
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